Should We Eliminate the Corporate Tax? | Wall Street Oasis

I was reading an article from the editors of Bloomberg BusinessWeek about eliminating the corporate tax while at the the same time raising the capital gains tax (as well as the tax on dividends) to equal the tax rate for ordinary income.?

I hadn't thought of this approach myself, and on the surface, my knee jerk reaction was to approve. After all, if the capital gains tax rate is 15%, it isn't really 15% because, as many of us know, the corporate tax rate is passed down to the ordinary investor like a beat-up pair of hand-me down shoes. If Company A earns $100 of pretax income, by the time our greedy government removes its grubby paws from our wallets, we've been taxed twice before we can say Emmanuel Saez.

The corporate tax rate of 35% leaves us with $65 to play with. And then the 15% capital gains tax reduces that $65 by $9.75, leaving us with $55.25. We are being taxed at a rate of 45%, which may be a higher rate than Warren Buffett's secretary is being forced to pay.?

If nothing else, the capital gains tax without the corporate tax will be a more transparent barometer for the casual observer....However, the Bloomberg article espouses the following perspective:

Although taxing capital has long been anathema to many economists -- on the theory that it discourages investment and thus economic growth -- recent studies are casting doubt on their assumptions. The?Congressional Research Service?found?in 2010 that reductions in the?capital-gains?tax are ?unlikely to have much effect? on long-term growth and ?would mostly benefit very high income taxpayers.? Leonard E. Burman, a public administration professor at?Syracuse University,?has found?that capital-gains rates ?display no contemporaneous correlation with real GDP growth during the last 50 years.?

Where is the proof to support this contention?

This is not a new idea for Mr. Burman. As far back as January 21, 2003, Mr. Burman wrote a paper entitled, "Taxing Capital Income Once." Here is the summary of his idea:

The President recently proposed to eliminate the double taxation of corporate income. The proposal contains the germ of a good idea, but it is incomplete. Indeed, implementing it as is would be undesirable for several reasons: it would add to our burgeoning national debt and thus reduce economic growth, it would be highly regressive, and it would have little or no effect on the epidemic of corporate tax shelters?a growing phenomenon that is both inefficient and unfair. This paper proposes to address all of these deficiencies by coupling the Administration?s proposal with full taxation of capital gains upon realization. The proposal would be revenue neutral, progressive, and would do more to improve the allocation of capital than the Administration?s proposal.

The president in question was Bush, not Obama, but the quote demonstrates that many ideas float around from year to year, from administration to administration, before they build up enough steam to be implemented.

Source: http://www.wallstreetoasis.com/blog/should-we-eliminate-the-corporate-tax

demi moore roy oswalt kevin martin 2012 senior bowl chuck series finale welcome back kotter 2001 a space odyssey